Digital Finance Transformation – more than mere repetition removal
Like many areas of the enterprise, finance departments are experiencing rapid transformation because of the impact of technology — not only on their internal workings but the changes that tech has brought to global markets.
The changing role of finance and accounting departments is now one of underpinning and supporting business decisions. In this new, and ever-evolving role, departments are required to produce real-time intelligence and benchmarking, in addition to their day-to-day responsibilities.
Business models are changing rapidly, as are the regulatory environments in which finance and accounting departments work. Both of these shifts are making organizations at whatever scale take an inward look at their processes and operations.
One way in which companies can update their finance departments is by adopting modern finance & accounting transformation software, to place them at a competitive advantage.
Gartner has recently published a Magic Quadrant for Cloud of Financial Close Solutions (July 2018) which focuses on applications that oversee control throughout the entire accounting cycle. The publication notes that it is minded to divide corporate performance management (CPM) solution market into two: financial corporate performance management (FCPM), and strategic CPM (SCPM).
SCPM focuses on aspects such as reporting, planning, budgeting, and future modeling; FCPM solutions can include financial reporting and consolidation, as well as enhanced financial control and automation (EFCA).
The division of CPM into two, points to the increased importance of financial close management in the smooth operation of today’s enterprise. Financial close automation solutions should, Gartner advises, be considered both regarding feature sets on offer, and the ability to deliver their advantages via the cloud.
It predicts that 80 percent of new financial close deployments will be cloud-based, and by the end of 2018, 60 percent of organizations will have replaced their legacy CPM suites with separate FCPM & SCPM solutions.
Financial leaders are shifting from on-premise solutions to the cloud because of enhanced control over costs, greater efficiencies, exemplary levels of application flexibility, and a shorter time to value (in real return on investment terms).
Cloud-based financial close solutions typically operate with pure-play web-based interfaces, giving users a GUI (graphical user interface) phrasebook and vocabulary which with which they are familiar, thanks in no small part to the ubiquity of modern tech, such as mobile phones.
While levels of user-adoption, via first-rate GUIs, need to be high, it is, of course, the underlying power of the financial platform which differentiates the products out there. At TechHQ, we have examined three offerings – see below – which enterprises may wish to consider as routes to financial digital transformation.
To a greater or lesser extent, each of the featured offers facilities for daily and period-end reconciliations, journal entries, transaction matching, variance analysis, and predictive analysis – the standard toolset. Where each differs is in delivery, use of GUI, and ability to integrate with legacy systems. It is vital, therefore, for enterprises wishing to deploy next-generation financial systems of this type to road-test the alternatives.
As well as integrating with legacy systems to the cover transition period to a new platform, it is vital that any new solution can integrate with existing systems that are essential to the business. Enterprise-wide ERP systems are a case in point.
One of the key goals of any finance transformation solution is to reduce human error in data duplication processes like double- or triple- entry into disparate systems.
And without a close integration with systems such as CRM and ERP, aggregate gains for the enterprise are lost — human error moves from department to department with no overall savings!
By removing human error, teams can focus on discrepancy analysis and streamlining for more insightful financial reporting. In this way, they can drive new value for the organization, letting automated systems cover the majority of processes which traditionally have been prone to error checking, inefficiency, and potential fraud.
With finance and accounting departments now playing a strategic role in the enterprise, finance leaders have to innovate to help their organizations sustain significant competitive advantage. That need still exists despite increased workloads due to regulatory pressures and the desire for more stringent oversights – CFOs have their work cut out!
If your organization is considering implementing a finance transformation solution, here are three providers which we at Tech HQ feel should be examined.
In a recent Gartner paper (Magic Quadrant for Cloud Financial Close Solutions, June 2018), the organization placed BlackLine as one of its leaders, with the California-headquartered company ranking alongside enterprise heavyweights Oracle.
Its solutions are available separately allowing a modular approach to finance department digital transformation, but the company also sells bundles – Balance Sheet Integrity, and Close Process Management packages, for example.
BlackLine integrates well into third-party ERP systems, including SAP, NetSuite, Oracle & Microsoft Dynamics, and all solutions are entirely cloud-based, available on a subscription basis. The company’s solutions helps “tame” the closing process, for example, by standardizing reconciliation and period-end activities.
There’s a high degree of automation available, obviating the need for personnel to manually (and often repetitively) enter data and process entries by hand. This cuts mistakes made by pure human error very significantly, so finance & accounting staff are freed up for other tasks, or are able to examine those transactions that appear anomalous.
Oversight over full finance transformation includes ledger reconciliations, journal entry management, and all period-end activities. There’s also full reporting and benchmarking.
Unlike some of its competitors, BlackLine’s solutions were built entirely for and in the cloud, and are not constituted of legacy on-premise, hybrid, or middleware-reliant systems.
To read more about Blackline, click here.
FloQast is another US company based in California which provides reconciliation management and close management solutions for midmarket level companies (less than $500 million turnover annually).
The company’s solutions are modeled on the way that finance departments already work, and are explicitly designed to eliminate manual and repetitive processes. The software provides analytics and a communication platform which helps organizations prepare for audits.
High-volume transaction matching capabilities are missing, but these are more commonly found in expensive, upmarket products. FloQast solutions are focused on workflow, collaboration, and integrations with existing methods, like the use of Microsoft Excel sheets. The solutions also interface seamlessly with NetSuite and Sage Intacct.
Customer satisfaction figures are reputedly excellent, with users citing ease-of-use and integration into accounting teams’ existing processes; the ability to continue working with Excel and departments’ own checklists is specifically quoted as a positive for the user base.
FloQast is excellently priced, typically costing 30 to 50% less than the higher end financial products. The solution is a cloud-based SaaS, and provides short to medium term return on investment, without the need for a complete financial transformation initiative.
The company is relatively new, and although it has sales channels outside the US, much of its business is still based in North America. It regards Europe as its next significant market, and as it expands, it will look to Asia, Australasia and beyond.
FinancialForce concentrates the majority of its offering on Salesforce and can deal with an enterprise’s financial systems, as well as its supply chain, human resource requirements and business intelligence.
The integration of the solutions into Salesforce ultimately brings together all decision-makers from right across the Salesforce ecosystem.
Account records are available, as well as data pertaining to partners, employees, customers, and suppliers, all on one platform.
FinancialForce is cloud-based, with a single sign-on giving access to the discrete information silos which may have been compartmentalized by businesses in the past.
Because even the most flexible ERP solutions require significant investment in personalizing the software according to an organization’s particular processes, FinancialForce can take Salesforce (already installed in around 100,000 organizations worldwide) and fine-tune the software to produce deep insights across the enterprise, according to need.
FinancialForce provides the financial and operational detail that out-of-the-box installs of Salesforce lack; effectively this is Salesforce “plus.”
*Some of these companies are commercial partners of TechHQ
29 September 2023
28 September 2023
28 September 2023